Ford cancels Mexico plant, to invest $700M at Flat Rock

Melissa Burden
The Detroit News

Flat Rock — Ford Motor Co. said Tuesday it is canceling plans to establish a $1.6 billion in plant in Mexico to build the Ford Focus. It plans to invest $700 million at its Flat Rock Assembly Plant and create 700 new jobs in Michigan as it adds production of a new electric small SUV and a self-driving hybrid vehicle.

Ford was repeatedly criticized on the campaign trail by President-elect Donald Trump for its plans to build a plant in San Luis Potosi, Mexico, where it was to build the next-generation Focus. Instead, it will build the car at an existing Mexico factory.

Ford President and CEO Mark Fields cited the company’s recent decision on a shift in buyer preferences as compact car sales have fallen. But he said factors included the pro-business environment it sees in the U.S. amid proposed policies under Trump.

Ford had planned to ship production of the Focus from the Michigan Assembly Plant in Wayne to the San Luis Potosi plant, on which initial construction had begun, Fields told reporters here. But he said the automaker decided “recently” to instead build the Focus at its Hermosillo plant in Mexico.

Fields said the decision was made independently of the president-elect, though his proposed policies were a factor.

“We look at all factors and in our view, we see a more positive U.S. manufacturing environment under President-elect Trump and the pro-growth policies and proposals that he’s talking about,” Fields said. “So this is a vote of confidence for President-elect Trump and some of the policies he may be pursuing.”

Ford Chairman Bill Ford Jr. called Trump, and Fields called Vice President-elect Mike Pence to share the news Tuesday morning.

“They were very pleased that we were investing here in the United States and actually adding 700 jobs on top of the 28,000 that we’ve added over the last five years,” Fields said.

Trump later re-tweeted a headline about the decision. And on Wednesday, he thanked Ford in a tweet: “Thank you to Ford for scrapping a new plant in Mexico and creating 700 new jobs in the U.S. This is just the beginning — much more to follow.”

Trump on the campaign trail often criticized Ford for its decision to shift production of small cars from the U.S. to Mexico. Ford defended its decision and said that no U.S. jobs would be lost over the decision, and instead two new vehicles would be coming to Michigan Assembly. The Detroit News and others have reported those are the Ford Ranger pickup and Bronco SUV.

Flat Rock will get a new manufacturing innovation center, and the factory will be capable of producing electrified and autonomous vehicles, plus the Ford Mustang and Lincoln Continental that it already builds here. Flat Rock will get two new vehicles: an all-electric SUV with an estimated range of 300 miles that will be built at the plant by 2020, and an autonomous hybrid vehicle will debut in 2021. Ford plans to use that self-driving vehicle for ride-hailing or ride-sharing services.

The cars are among 13 new global electrified vehicles to be introduced in the next five years, including an F-150 Hybrid pickup available by 2020 to be built at the Dearborn Truck Plant, Mustang Hybrid debuting in 2020 and Transit Custom plug-in hybrid available in 2019 in Europe, the company said Tuesday. Ford also plans to build two new hybrid police vehicles, one of which will be built in Chicago.

Ford in December 2015 said it would invest $4.5 billion in electrified vehicles by 2020.

Americans have not embraced electric vehicles. But Ford believes adoption will grow.

“We think the industry is changing, the infrastructure’s starting to build,” Fields said. “That’s our view that within the next 15 years we’ll see more electrified offerings ... it’s hybrids, plug-in hybrids and battery-electric vehicles, than we’ll see gasoline-powered.”

Some analysts are skeptical that consumers will buy in.

“Ford’s commitment to more hybrids and electrics is a leap of faith, as current sales of electrified vehicles are terrible,” said Brad Korner, general manager of AIS Rebates, a Cox Automotive brand company. “In the market today, hybrids and electrics are among the industry’s most incentivized. Ford is betting big that this trend will change over time and the world is ready for hybrid versions of the Mustang and F-150. It’s a big bet.”

New jobs may be added at Flat Rock beginning in 2018, with the majority happening in 2020, Fields said.

Ford announced the Flat Rock investment news to employees and members of the news media who gathered in the plant. “Ford is a global automaker, but our home is here in the U.S,” Fields said.

United Auto Workers Vice President Jimmy Settles thanked Ford for putting people over profits, and for keeping and expanding jobs in the U.S. He told workers at the plant that temporary workers at Flat Rock will be made permanent employees, though he did not have specifics on how many would be hired. Settles told reporters he learned of Ford’s decision about a week ago.

The Flat Rock plant had been on a closure list in 2009 during the economic recession. Settles said the announcement gives the 3,200-plus workers here a future.

He said he thinks Flat Rock was chosen for the new products, including the autonomous vehicle, and investment because it has space, is not running at full capacity and because workers have led successful launches of the Mustang and new Continental.

“I’ve been around a lot and seen a lot and many peaks and valleys, but this is at the top because I know what this will mean long-term for people in this plant and also in America,” Settles said.

Ford is working with the state of Michigan and local officials to receive possible tax incentives for the Michigan investment. Ford employs 47,000 workers in the state.

The Michigan Economic Development Corp. declined comment Tuesday on any pending incentive package. The earliest the Michigan Strategic Fund could review a request is Jan. 24, spokeswoman Emily Guerrant said, but she was unsure if a Ford package would be ready for consideration.

Fields said Mexican officials were somewhat disappointed by Ford’s change; that plant was supposed to employ 2,800. But Fields said its decision will safeguard 2,900 jobs at the Hermosillo plant and it will add about 200 jobs there.

He said Ford’s production change overall will save $500 million.

Ford stock closed up 3.8 percent to $12.59 Tuesday.

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Staff Writer Jonathan Oosting contributed.